2021 Ohio 859
Ohio Ct. App.2021Background
- Plaintiff Stuart Hinerman invested in and was a minority member of two LLCs (The Grill on Twenty First, LLC and Twenty First Street Properties, LLC) formed with defendant Eric Mason; operating agreements gave Hinerman fixed percentage interests.
- Hinerman sued Mason and the LLCs alleging Mason misappropriated corporate funds and made unauthorized distributions/transactions for his personal benefit and related businesses.
- Major pretrial discovery dispute: defendants produced QuickBooks files but failed to produce underlying source documents; trial court granted motions in limine excluding documents and testimony based on undisclosed source materials.
- Bench trial was held June 22–24, 2020; the court excluded certain testimony and evidence as discovery sanctions and allowed proffers in part.
- Trial court found Mason misappropriated approximately $1.87 million (treated as distributions), awarded Hinerman his proportionate shares, and entered judgments against The Grill and Twenty First Street and Mason; defendants appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Admissibility of rebuttal hearsay (Antritt re: Armstrong) | Hinerman sought to admit Antritt’s testimony as rebuttal to expected Armstrong testimony; trial court properly managed COVID-era scheduling. | Defendants argued the statements were hearsay and prejudicial because offered before Armstrong testified. | Court upheld admission for rebuttal but found it was not considered (objection sustained when Armstrong never testified); no prejudice—assignment overruled. |
| 2. Exclusion of Mason’s testimony about loans/repayments (sanction) | Hinerman argued exclusion was proper because defendants failed to produce source documents despite orders; sanction within court’s discretion. | Defendants argued exclusion improperly barred Mason from explaining loans and repayments necessary to defend against distribution claims. | Court affirmed exclusion as a discovery sanction and found Mason’s proffered testimony lacked specifics; no reversible prejudice. |
| 3. Finding re: when Hinerman acquired property interest (2003 v. 2007) | Hinerman relied on testimony and leases showing earlier involvement and that later conveyance did not give him cash consideration. | Defendants argued the property was purchased in 2007 on Mason’s credit, so trial court’s factual phrasing was erroneous. | Court found competent evidence supported trial court’s factual findings; any wording quibbles were immaterial to the judgment. |
| 4. Valuation of the 21st Street property at $1.25M | Hinerman argued the record supported a $1.25M valuation (deed, refinancing, bank mortgages). | Defendants argued lower market values at sale (Cover paid $565K) and trial court’s valuation was against weight of evidence. | Court held there was credible circumstantial and documentary support for the $1.25M figure (deed, mortgage/refinance history); finding sustained. |
| 5. Whether Cover’s discounted purchase price and rents benefitted Mason (distributions) | Hinerman asserted Cover’s discounted purchase and subsequent lease income indirectly benefited Mason (debt relief, continued pecuniary advantage) and thus entitled him to a share. | Defendants emphasized Cover’s testimony denying any arrangement to benefit Mason and lack of direct proof Mason profited. | Court found sufficient circumstantial evidence that Mason benefited (connections, unpaid debts, lease negotiations) and awarded Hinerman 10% share; holding upheld. |
Key Cases Cited
- Nakoff v. Fairview General Hospital, 75 Ohio St.3d 354, 662 N.E.2d 1 (1996) (trial court discretion in discovery sanctions)
- Blakemore v. Blakemore, 5 Ohio St.3d 217, 450 N.E.2d 1140 (1983) (abuse of discretion standard)
- Eastley v. Volkman, 132 Ohio St.3d 328, 972 N.E.2d 517 (2012) (manifest-weight standard in civil cases)
- Beard v. Meridia Huron Hospital, 106 Ohio St.3d 237, 834 N.E.2d 323 (2005) (reversible evidentiary error affects substantial rights)
- C.E. Morris Co. v. Foley Constr. Co., 54 Ohio St.2d 279, 376 N.E.2d 578 (1978) (appellate review of factual findings requires competent, credible evidence)
- Rigby v. Lake Cty., 58 Ohio St.3d 269, 569 N.E.2d 1056 (1991) (trial court’s broad discretion on evidentiary rulings)
- State v. DeHass, 10 Ohio St.2d 230, 227 N.E.2d 212 (1967) (trier of fact may accept or reject testimony)
- State v. Jenks, 61 Ohio St.3d 259, 574 N.E.2d 492 (1991) (circumstantial evidence has probative value)
- Columbus v. Guthmann, 175 Ohio St. 282, 194 N.E.2d 143 (1963) (presumption that trial court disregards improperly admitted evidence when it acts as factfinder)